by Shideh Kerman, B.Eng., MBA
Truer words were never spoken: “The greatest wealth is health.” Virgil’s words ring true and dear to Coloradans. We are on the forefront of the raging health discussion, with potential plans to enact a new healthcare system called ColoradoCare, a single-payer plan. ColoradoCare, with a projected annual budget of $38 billion, based on a recent report released by Colorado Health Institute last month, would bring major changes to the state.
Amendment 69 is the ballot measure that would create “ColoradoCare.” The amendment was approved after the proponents collected more than 109,000 signatures. Amendment 69 will go on the ballot for residents of Colorado to vote on this November. If approved, it would create ColoradoCare.
What Is ColoradoCare?
ColoradoCare is a single-payer plan, which means it would be a universal health care plan, rather than a system based on private insurers. This program is similar to systems in Europe, where health insurance is financed by taxes.
ColoradoCare aims to provide all residents with Medicare style health coverage, getting rid of deductibles and co-payments. Despite the steep state tax increase that would be enacted to cover the new healthcare system, not paying costly deductibles and co-payments may reduce the monthly health cost for the average resident. For some, especially those with chronic conditions who see doctors frequently, this could significantly reduce health spending. Should a community support the unlucky individuals who struggle with their health on a daily basis? The question of whether ColoradoCare would help to ease this burden is on the minds of some.
Why Was ColoradoCare Created?
There are concerns that Obamacare does not provide adequate healthcare for its citizens. ColoradoCare was initiated due to dissatisfaction surrounding Obamacare and high costs of medical care. If ColoradoCare is approved, it would replace Obamacare within the state of Colorado. A section of the Affordable Care Act allows states to waive the federal healthcare program if the state can enact a successful plan that provides residents access to high quality, affordable insurance. If the plan is enacted, Colorado will be the first state in the country to replace Obamacare. Vermont tried to implement a similar health care plan two years ago, but the plan fell apart when the Vermont governor, Peter Shumalin, said the state could not pay for such a program.
How Will ColoradoCare Get Funded?
Much of the debate stems from the source of the funding for ColoradoCare. We still don’t have a clear picture, but in order to fund such a project, Colorado will need to come up with $25 billion. According to the Census Bureau, the state budget is just over $30 billion. The additional revenue to fund this expensive project will come from a steep state tax increase on all Colorado residents. The Colorado Health Institute states it will require an additional 10% tax on all earned income generated in Colorado. Businesses will be required to pay 6.67% tax, and their employees will be responsible for another 3.33% tax. The state income tax rate would increase, which would firmly place Colorado in the top 10 states for income tax. Sole proprietors will be hit the hardest, as they will be responsible for paying the full 10% themselves, thus bringing their total state income tax to 14.63% — the highest in the nation. The fear of such a high tax rate is that it could negatively affect the working poor, middle class, and small businesses. It also may prevent companies from moving to Colorado, or it could force companies to move away, thus creating a job deficit.
How Is ColoradoCare Going To Affect Coloradans?
Currently, it is not entirely clear how ColoradoCare would affect individuals, providers, and businesses. There is much ambiguity as to how the plan will be carried out, and how it will be funded.
Some argue that ColoradoCare will reduce the high administration costs due to complicated insurance plans. With the current system in place, receiving insurance reimbursement is a lengthy process that requires a good deal of expertise, training, and time from billing health professionals. Every insurance company has different billing policies and reimbursements, and it is time consuming for office staff to wade these perilous waters. One goal of ColoradoCare is to reduce these costs by creating a universal plan, which, by definition, should result in a simpler billing policies. This would, in theory, reduce the amount spent on administrative support staff, thus reducing overall healthcare spending for the state.
If ColoradoCare is enacted, it isn’t clear how it will affect physicians. Some fear that physicians may leave the state in search of better pay. Last year, Medicaid and Medicare announced it could only reimburse the nation’s health insurers 12.6% of what they were entitled to. This translates into Medicare and Medicaid reimbursing just $362 million of the promised $2.9 billion. If ColoradoCare is switching to a Medicare-style program, it is possible physicians will be compensated less for their services. If this is the case, doctors may not be incentivized to practice in Colorado, which could reduce the quality of care received.
Heated debates are going on across the state as to whether we should substitute a universal system over the federal regulations. Whether it will be a better program than Obamacare is only speculation, with both avid supporters and enraged opponents. While Colorado strives to be on the forefront of the country, innovation carries significant risk. Despite the risk, there are fervent supporters to the vision of universal healthcare. On a national level, we forged the road to legalized marijuana, and perhaps we will pioneer the way to a better health care system.